Money for nothing?
The demand for a basic income de-linked from wage labour appears to be gaining ground, in parts of Europe at least. But is it really as radical as it sounds? Max Henninger offers some observations on the German debate
One of the strategic proposals most widely debated within contemporary political movements opposing capitalist globalisation is that for a basic income de-linked from wage labour. Various French and Italian theorists have contributed significantly to spreading awareness of this proposal. Its history within the radical left of the Federal Republic of Germany (FRG) is less well known. The following remarks are a modest attempt to consider that history and its implications for those advocating a basic income today. The conclusions drawn are derived exclusively from the German situation. Whether or not they also hold for other countries is a question the reader must decide for him- or herself.
The Basic Income Proposal in the FRG
In the FRG, the demand for a basic income was first formulated following the 1981/82 economic crisis and the 1982 chancellorship of Helmut Kohl, the conservative politician who remained in power until after the annexation of the German Democratic Republic (1990). At the time, the proposal to introduce a basic income was advanced by political organisations fending for the rights of welfare recipients. It was a response to rising unemployment and the austerity measures championed by Kohl. The proposal never became part of a widely endorsed militant platform, largely remaining a matter of theoretical debate instead. This was still evident in 1998, when a congress devoted to the basic income was organised by autonomist activists in Berlin. The congress was relatively well attended and kept the theoretical debate alive, but it did not lead to significant changes in what was then already a highly fragmented militant practice.
In 2005, the basic income resurfaced as one of several demands formulated by the organisers of the weekly ‘Monday demonstrations’ held throughout the FRG. These demonstrations, attended mainly by the country’s unemployed, protested the austerity and workfare measures currently being implemented in Germany. Like earlier germs of popular resistance, the Monday demonstrations have not developed into a broad militant movement. Nevertheless, the basic income proposal is currently being debated more widely in the FRG than it has been for years. It features on the platform of the German section of Attac as well as in the programs of several regionally and nationally organised extra-parliamentary groups. Some members of the reformist Left Party are fending for the basic income in parliament. Variants of the proposal are also being debated within the academy, mostly by representatives of the liberal or centre-left spectrum such as sociologists Ulrich Beck and Claus Offe. Entrepreneurs (Goetz Werner) and neoliberal economists (Thomas Straubhaar) have also recently jumped on the bandwagon. This development has of course provoked fierce polemics as to how progressive the basic income proposal really is.
As defined by the Basic Income Earth Network (BIEN), the basic income would be a monetary sum paid out to every citizen on a regular (e.g. monthly) basis, regardless of that citizen’s employment history and his or her reliance on other incomes. The basic income would be sufficient for financing a comfortable standard of living, and it would be paid out regardless of the recipient’s financial situation. Radical proponents of the basic income insist on the need for de-linking it from every obligation to work, whereas liberal proponents tend to view it as a way of remunerating various forms of non-profit community service, which they would make compulsory. Models for financing the basic income range from the so-called ‘take half model’ (which proposes a 50% tax on every income, regardless of its magnitude) and a dramatic increase in value-added tax to various forms of progressive taxation. Some have also proposed a tax on financial transactions.
Several proponents of the basic income consider it an adequate replacement for the various forms of financial support currently administered by the FRG’s welfare state. Others envision it as a supplement to such support. There is a consensus among the basic income’s proponents that the FRG’s welfare state is inadequate in its present form, and that it is currently suffering a serious crisis. A brief consideration of the phenomena underlying this view is indispensable for properly evaluating the basic income proposal.
In the FRG as in other countries, official statements about the welfare state’s growing difficulties in financing its services (pensions, public healthcare, and unemployment relief) can be heard daily. Such statements have recently been used to justify both the raising of the legal pension age from 65 to 67 years and a significant increase in value-added tax. They have also been used to justify reforms that increase the pressure on unemployed persons to return to work while exposing those persons to a number of humiliating measures such as unannounced house visits. Many of the long-term unemployed are now being forced to move into smaller, less costly apartments.
Understanding these developments requires recognition of some basic facts about the welfare state and its function within capitalist economies. The most important thing to recognise is that the welfare state does not in any meaningful sense pay for the survival of the economically needy. In the case of pensions, the state merely appropriates a percentage of the wages of full-time workers and promises to return this sum after those workers are no longer of use on the labour market. Unemployment relief is also financed out of the wages of full-time workers. This strict correlation between waged labour and the sums made available for survival in old age or during unemployment has important consequences. How much an entrepreneur pays into the welfare fund depends on the number of full-time workers he or she employs. This creates an incentive to reduce the number of such workers by downsizing, outsourcing, and relocating production to countries with more attractive systems of taxation. It also creates an incentive to resort to part-time work, temp work, and internships.
The pension system delegates responsibility for financing the survival of one part of the non-working population to other parties (entrepreneurs and workers). The state appropriates funds through political constraint, without entering into a formal contract with those from whom it appropriates them. This means the conditions for money being paid out in the form of pensions can be altered at any time (by lowering pensions, either directly or by raising taxes, and by raising the legal pension age). The same is true of unemployment relief, as illustrated by the recent changes both in the criteria by which eligibility is determined and in the magnitude of the sums paid out, and it is also true of the public healthcare system. The latter forces the working population to cover its own healthcare costs even when those costs result from entrepreneurial or state decisions (as is the case, for example, with costs resulting from environmental pollution or war).
The welfare state is premised on the hegemony of a particular type of employment relation, that of the full-time worker. This worker is essentially the male, Fordist worker championed by the traditional labour movement. Where this employment relation becomes less widespread, the welfare state quickly runs into difficulties. The tendential waning of the Fordist employment relation is one of the root causes of the welfare state’s current crisis. This crisis is genuine despite the ideological smokescreens surrounding it.
Between 1991 and 2005, the number of employment relations in Germany corresponding to the model of the full-time worker who pays into the pension, healthcare, and unemployment funds declined by 13%. In absolute terms, the number of workers in such employment relations – still characterised as ‘normal’ in German economic discourse – sank from about 30 to about 26 million. About 30% of German workers now find themselves in so-called ‘atypical’ employment relations, such as part-time or temp work, with 23% of the working population doing part-time work. Most of these part-time workers are employed in so-called ‘Minijobs’ or ‘Midijobs’. This means they earn a maximum of €400 or €800 a month, respectively. Neither they nor their employers pay into the pension fund. Many such workers do not have healthcare.
In addition to these developments, low wages have become increasingly widespread throughout the FRG, even among those employed full-time. Both nominal and real wages have been sinking consistently since the mid-1990s. This further reduces the magnitude of the sums available for redistribution by the welfare state. A growing number of qualified workers and persons with a higher education are affected by the drop in wages, as are workers above the age of 30. Women are especially hard hit, as they make up about 70% of workers in the service sector, where wages have traditionally been low. German trade unions have frequently sanctioned the fixing of low wage standards in the service sector, as in Saxony, where the standard wage for hairdressers is now €3.06 an hour. The pressure on wages (and the incentive to sack ‘normal’ full-time workers) has been increased significantly by the introduction of workfare measures such as the ‘one-euro-jobs’ championed by former chancellor Gerhard Schroeder. This measure allows entrepreneurs to recruit unemployed persons for a purely symbolic wage of €1, for up to 150 hours a month.
Comparing the FRG’s current labour market with that of the early 1970s, when the country’s radical left began borrowing the concept of ‘class composition’ from Italian theorists, one is tempted to characterise the developments just described as ‘class decomposition’. During the early 1970s, the strength of the German welfare system rested on the figure of the Fordist worker championed by the traditional labour movement. Today, this worker – who never represented the entirety or even the most exploited sector of the working class, but was arguably important by virtue of the political power he exerted by means of the trade unions – is threatening to become a marginal figure. He is tendentially yielding to a plethora of persons in highly diverse and unstable employment relations. They do not dispose of the reliable and comparatively high income the traditional welfare state administered and partially redistributed with relative success during its heyday (the years of ‘full’ – and full-time – employment between 1958 and 1975). A significant part of the working population is now excluded from the welfare state’s services, just as many workers no longer provide that state with the funds it requires to operate successfully.
What Kind of Proposal is the Basic Income Proposal?
The basic income proposal represents one possible way of addressing the crisis of the welfare state. When assessing this proposal, it is worth keeping in mind just what it is and what it is not. Within the radical left, the basic income is associated with much rhetoric, but there is often little consideration of the sometimes ambivalent developments its implementation would entail.
The basic income proposal does not address the question of who owns and controls the means of production. This partly explains why those representatives of the FRG’s capital-owning classes sufficiently sober-minded to recognise the problems faced by the welfare state have recently taken so warmly to the basic income. They have an interest in assuring not just the physical reproduction, but also the political quiescence of the labouring classes. The basic income promises both. Many models for financing the basic income also present entrepreneurs with the prospect of significant fiscal relief. This is the case, for example, with the ‘take half’ model. Furthermore, the introduction of a basic income would facilitate a dramatic lowering of wages. If the basic income were to be financed by an increase in value-added tax, this would allow entrepreneurs to continue shifting the burden of financing the reproduction of the wage- and welfare-dependent classes onto those classes themselves.
This is related to another feature of the proposal, which is that it is focused on circulation, rather than on production. The basic income is a device for re-distributing existing incomes – or, more generally, economic value. It does not address the question of how economic value is produced. This has significant consequences. If the basic income were to be financed by a tax on entrepreneurial profits, this would create a strong incentive for the corporations affected to increase those profits – a development that would not necessarily affect the recipients of the basic income in the country where it is introduced, but which would have significant consequences for workers in the countries where the corporations on whom the tax is levied produce. One of the corporations affected in the FRG, for example, would be Volkswagen, which now produces mainly in Slovakia. When the German radical left demands the introduction of a basic income in the FRG, to be financed by a tax on entrepreneurial profits, it is implicitly demanding increased exploitation in countries such as Slovakia.
This is one, but not the only sense in which the basic income proposal is tendentially nationalist, and perhaps even racist. By appealing to national governments for legal and economic reform, the proponents of the basic income implicitly recognise the legitimacy of the nation state. They thereby tacitly accept the criteria by which national governments grant or refuse a person the status of legal citizen. A law introducing a basic income for all citizens of the FRG would simultaneously refuse such an income to all undocumented immigrants, regardless of the fact that these immigrants and their off-the-books labour are an important part of the FRG’s economy.
Arguably, this nationalist or racist element of the proposal entails a sexist element. As noted, many persons who depend for their living on labour performed in the lower strata of the service sector are women. A significant number of these women are also undocumented immigrants. The introduction of a basic income would improve the financial situation of most middle-class households, but it would not alter the situation of the many female undocumented immigrants who perform domestic work in those households. Some German proponents of the basic income have suggested the implementation of their proposal would allow women to withdraw from the labour market and concentrate on housework and childrearing. In making such statements, they are ignoring those women who are not recognised as legal citizens and would therefore not be eligible for a basic income. They are also contributing to the anti-feminist rollback the country has been experiencing for several decades. The protagonists of that rollback defend a similarly reactionary concept of female identity.
It may be objected that no fundamentally nationalist and sexist system allows for implementing reforms in a way that is not to some extent complicit in this nationalism and sexism, however radical those reforms may otherwise be. If this is true (and there is much to suggest it is), the question becomes whether or not one wants to be actively involved in such reformism. Ultimately, this is a question politically active individuals and groups need to settle for themselves. It is difficult to make general prescriptions. Not only does the data currently available allow for divergent projections about likely future developments, but the decision would also seem to partly be a question of personal morality. What can be said, however, is that possible effects of a basic income such as the further institutionalisation of racism and sexism should not be ignored.
Since the basic income proposal brackets the question of who owns and controls the means of production, it should be clear that it is reformist in the sense that it accepts many basic parameters of developed capitalist economies. Far from eliminating the social relation that capitalism is, a relation that finds its clearest expression in the wage and in the money form in general, the basic income proposal in fact depends on and accommodates itself to that relation. While it certainly represents a particularly extreme device for redistributing incomes through taxation, such redistribution is far from being new to capitalism or incompatible with it.
One last feature of the basic income proposal worth emphasising is its profoundy voluntarist character. The history of the proposal in the FRG shows it has been endorsed only by relatively narrow sectors of the exploited classes, namely the unemployed and – more recently – those young, often academically qualified persons to whom the FRG’s current labour market offers few possibilities besides internships, self-employment, and sporadic part-time or temp work. The basic income proposal has been consistently rejected by the FRG’s organised workers, who are rightly distrustful of the tax measures by which its advocates hope to finance it. Proponents of the basic income often speak as if calls for such a measure might constitute the basis for a broadly endorsed militant platform. They can do so because the proposal addresses the economic insecurity and the desire for a liberation from work that are indeed characteristics shared by most members of the exploited classes. Yet in considering only questions of how value circulates, and not of how it is produced, these proponents of the basic income also gloss over the significant differences associated with the specific positions various kinds of workers and unemployed persons hold within the economy. The arguments formulated by these proponents of the basic income are voluntarist in that they conclude from the common predicament of being wage- or welfare-dependent that a political unity can be established regardless of the fact that economic exploitation and constraint take a variety of different forms, each entailing its own risks and privileges and giving rise to different, sometimes antagonistic interests.
Max Henninger lives and works in Berlin. He is co-editor, with Giuseppina Mecchia and Timothy S. Murphy, of ‘Italian Post-Workerist Thought’ (a special issue of the journal Substance devoted to the work of Antonio Negri, Paolo Virno, Antonella Corsani, and others) and author of ‘Doing The Math: Reflections on the Alleged Obsolescence of the Law of Value under Post-Fordism’ (ephemera: theory and politics in organization, 7.1).